QEP Resources Inc Stock Downgraded (QEP)

QEP Resources (NYSE:QEP) has been downgraded by TheStreet Ratings from from a buy to hold.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- QEP Resources (NYSE: QEP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

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Highlights from the ratings report include:

The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 24.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Net operating cash flow has significantly increased by 65.10% to $537.90 million when compared to the same quarter last year. In addition, QEP RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of -6.77%.

Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.

Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, QEP RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 151.7% when compared to the same quarter one year ago, falling from $178.40 million to -$92.30 million.